Rite Aid sells Hecht building N.Y. investment group may convert it into laboratory or housing

Commercial real estate

December 06, 1997|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Rite Aid Corp. has sold the former Hecht Co. department store building on Howard Street to a New York real estate investment group that is considering several options for the nearly vacant project.

Merchant Equity Financial Group's potential plans for the eight-story, 225,000-square-foot building -- acquired from the Camp Hill, Pa.-based retailer for more than $3 million this week -- include converting it to apartments or redeveloping it to accommodate laboratory tenants.

"We're evaluating our options for the building now," said John Mannix, president of Merchant Equity Financial, a real estate venture capital firm backed by investment house PaineWebber Inc. "We hope to have a plan of action developed in three to six months. But we're very interested in urban redevelopment projects, and obviously this building is suited to that."

In all, Merchant Equity Financial controls roughly $500 million worth of real estate, mostly property occupied by large corporations such as Rite Aid.

Merchant Equity Financial acquired the 118 N. Howard St. building along with five other Rite Aid-owned buildings in Ohio and Virginia totaling 1 million square feet, Mannix said.

As part of the sale, Rite Aid has signed a lease that will keep its ground-floor store open at least through 2019, and possibly as long as 2039, said Sarah Datz, a Rite Aid spokeswoman.

"Our focus is retail," Datz said. "This is something we do as a

normal course of business."

Rite Aid bought the building in January 1995 for about $1.7

million and invested another $3 million to open a 12,000-square-foot store there. The store has sales of about $5 million annually, sources said.

But despite the success of the retail component, Rite Aid's plans to redevelop the office portion of the property, which had been vacant since the May Co. closed its store there in 1989, never materialized. Except for Rite Aid and a PayLess shoe store, the building is empty.

Rite Aid had explored plans for both additional retail and offices on the upper floors of the 72-year-old building, which five years ago was seriously considered by the city as headquarters for the Baltimore Police Department.

In addition to laboratory or housing, Merchant Equity Financial also intends to consider adding retail or office tenants, said L. Bruce Matthai, a vice president and principal of Colliers Pinkard, the Baltimore commercial real estate firm that represented Rite Aid in the sale and is now working with the new owner to lease the building.

"This was an absolute home run for Rite Aid, because they have a terrific store on the ground floor," Matthai said. "And Merchant Equity is a dynamic group of entrepreneurs who have bought a good structure at a good price, and they see unlimited opportunities."

Pub Date: 12/06/97

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